Qualify for FULL 1031 exchange? Single family rental to owner occupied duplex

[Kim Li]

I own a single-family rental that I plan to sell and use the proceeds (approximately $340,000) toward purchasing a duplex for about $1,000,000. In this duplex, each of the units are of equal size. I want to live in one unit immediately and rent out the other. In a 1031 exchange, would I be able to apportion the entire amount of the proceeds toward the investment (rental) unit so that I can qualify for a full exchange and effectively defer 100% of the gain? Or would the IRS treat this as a partial exchange due to the owner-occupied unit? In California. So in this scenario, if I relinquished a single-family rental and get a replacement property that is a duplex where I live in one of the units and rent out the other, what percentage (50% or 100%) of capital gains can I defer in taxes?

[Michael Plaks]

Quote from @Kim Li:

I own a single-family rental that I plan to sell and use the proceeds (approximately $340,000) toward purchasing a duplex for about $1,000,000. In this duplex, each of the units are of equal size. I want to live in one unit immediately and rent out the other. In a 1031 exchange, would I be able to apportion the entire amount of the proceeds toward the investment (rental) unit so that I can qualify for a full exchange and effectively defer 100% of the gain? Or would the IRS treat this as a partial exchange due to the owner-occupied unit? In California. So in this scenario, if I relinquished a single-family rental and get a replacement property that is a duplex where I live in one of the units and rent out the other, what percentage (50% or 100%) of capital gains can I defer in taxes?

As @Bill B. pointed out, your numbers are unclear. For both properties, we need to know, at a minimum:
- sales price
- mortgage
- cash
Then we can have a rough estimate whether your numbers work for a full deferral.

As far as your duplex question, it is not a problem in itself, as long as the numbers work. For tax purposes, you're buying two properties. Half of the duplex as an investment exchange and the other half as a residence for cash.